Lawsuit fees add up for Gladstone

GLADSTONE — The Gladstone City Commission heard about the financial impact of multiple lawsuits filed against the city of Gladstone by former city commissioner Mike O’Connor during its regular meeting Monday.

City Manager Darcy Long shared an update on the situation.

“I’m (going to) provide as much as I’m allowed that isn’t attorney-client privilege and kind of go through our current expenses that the city has,” Long said.

The city of Gladstone has assembled a legal team in response to the lawsuits in question, Long said.

“We have a couple lawyers that are experts in different things that are working with the city on this process,” he said.

However, the process of responding to these lawsuits has had a significant impact on the city’s finances. Solely considering legal costs, the lawsuits have cost the city of Gladstone $115,694.58 through late August 2018.

“That’s broken up into several funds,” Long said. The suits have cost the city’s utility funds (including water, wastewater, and electric funds) $50,454.10, the city’s general fund $43,217.54, and the Gladstone Downtown Development Authority (DDA) $22,022.95.

To put this amount of money into perspective, Long shared examples of other things the city could have used the money for instead. According to Long, $115,694.58 would be enough to hold a Fourth of July fireworks display every month for 19 months, to fund two Gladstone Public Safety K-9 units, or to buy 23,373 pasties from Dobber’s Pasties.

“It’s enough to feed Gladstone residents four and a half pasties per resident,” he said.

Last year, O’Connor filed a total of four lawsuits against the city of Gladstone. On June 29, 2017, he filed his first lawsuit against the city. This lawsuit alleged the city and DDA “flagrantly violate the Constitution of the State of Michigan” and that the DDA knowingly failed to return funds O’Connor said they had captured through illegal increases in tax incremental financing.

O’Connor filed a second lawsuit specifically against City Clerk Kim Berry on Aug. 28, 2017. Berry had rejected a petition he had started for a ballot initiative that would have given Gladstone residents an opportunity to vote to abolish the DDA by repealing the city ordinances which had allowed it to be created.

In a letter, Berry stated the petition was denied due to issues with its language and because the request was an administrative determination instead of a legislative action, which made it contrary to state law on petitions. O’Connor’s suit alleged Berry’s rejection of the petition violated his rights under the state constitution and the Home Rule City Act.

Another lawsuit filed by O’Connor on Sept. 7, 2017, claimed the city’s transfer of electric department funds to the general fund for the creation of a pension stabilization fund was a form of “backdoor taxation” in violation of the Headlee Amendment to the Michigan Constitution.

On Sept. 18, 2017, O’Connor attended a meeting of the state tax commission in Okemos, Mich. There, he presented himself as a representative of Gladstone and argued for charges to be pressed against the city. Gladstone filed an injunction against O’Connor to prevent him from continuing to portray himself as a city representative on Oct. 9.

As the injunction was filed, a fourth lawsuit from O’Connor was underway. This lawsuit was similar to the suit he filed regarding the transfer of funds from the city’s electric department to its general fund, but it specified that funds were transferred from the water, wastewater, and solid waste funds.

Long said the city of Gladstone’s legal costs will continue to increase as the city works towards the lawsuits’ court dates.

“There’s court dates scheduled in December and then, early 2019, we have some hearings scheduled,” he said.

During a time for commissioner comments later in the meeting, Mayor Pro Tem Brad Mantela expressed his disappointment with O’Connor’s decision to file these lawsuits instead of using his former position as a commissioner to push for positive change.

“Instead of helping be part of the solution, he has become, in my opinion … a big part of the problem,” he said.

Mayor Joe Thompson said that — while the financial impact these suits have had on Gladstone is significant — they have affected the city in other ways, as well.

“These Mike O’Connor lawsuits have a much bigger impact than just the financial impact, because they cause a lot of instability and uncertainty and puts a lot of stress on all the people that work for the city,” he said.

In other business, the commission:

– approved a minor amendment to the city’s utility policy. This amendment deals with how the city will handle funds from the Michigan Energy Assistance Program, as well as other financial assistance.

– appointed Greg Styczynski of Rock Electric, Inc. to the DDA.

– instructed Long to look into possible methods for improving the handling of phone calls to the city.

– postponed a pair of scheduled closed sessions, as there were not enough commissioners at Monday’s meeting to hold them. These closed sessions have been rescheduled for the commission’s next regular meeting.